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During recessionary times, consumers' values change. The obvious thing to look at is price. From both retailer earnings reports as well as Nielsen consumer research, it appears clear that "value" retailers are winning during this difficult economic period.
We've seen statistics showing private label products are gaining market share against national brands, and retailers like Walmart and the dollar stores are gaining customer trips and household penetration compared with other types of retailers.
But not every retailer has the buying clout and supply chain efficiencies of Walmart. Without those advantages, being a price leader could get dangerous. It could turn out to be a margin erosion strategy rather than a value strategy.
While providing a value product offering is extremely important to today's financially strapped consumer, I think there is a bigger danger. In the effort to reduce prices to attract customers, retailers and manufacturers need to explore and find new and innovative ways of filling consumer needs.
Innovation is just as important as price. In fact, innovation is probably more important than price if that innovation provides value and security to consumers in troubled times.
From the manufacturer side, suppliers must be cautious not to throw away their entire new product development strategy just because of the recession. A recent report by Nielsen's Consumer Insight group noted consumer habits are actually slow to change and "their purchase interest in everyday goods is relatively stable over time regardless of macroeconomic conditions."
This is not to suggest that suppliers follow all the same principles that guide their new product innovation decisions during normal economic times. Nielsen recently mined insights from about 35 new item launches that are being actively monitored across a variety of packaged goods categories in the U.S. The report warns suppliers to resist the impulse to pull back on new product development and suggests that even higher-priced items can succeed during recessionary times if the fundamentals driving the product's development are right.
Luckily, the c-store industry has been fertile ground for suppliers to test new products — from the biggest convenience store product success story of 1969 (announced in the very first issue of CSNews, April 11, 1969) when Stokely-Van Camp Inc. introduced Gatorade in southern states and Hawaii. (See CSNews' special 40th anniversary microsite for more new product hits -- and some misses -- from the past 40 years, at www.csnews.com/40.)
Still, it comes down to true innovation. Innovation is also the perfect lead-in to announce the expansion of Convenience Store News' Best New Products Awards program. Now in its 13th year, the CSNews Best New Products program partnered last year with Phil Lempert, the NBC News' "Today Show" food trends editor and correspondent, who will supervise the judging. (See Lempert's Hits & Misses Product Reviews, available on www.csnews.com/products.)
Designed to honor the top new products introduced to the convenience channel in the past year, the 2009 awards program was expanded to include 25 product categories. Lempert will rate the products submitted on the basis of taste, value, convenience, healthfulness, quality ingredients, preparation requirements, appearance and packaging. But to truly stand out from the crowd, the winning products must be innovative.
Click here to view a pdf with the entire list of this year's award categories.
Winners will receive a crystal engraved award, coverage in CSNews' NACS Show Daily and in the post-NACS Show issue of CSNews. Winners may also use the 2009 Best New Product Award logo in all future promotion materials. Entry deadline is Aug. 14.
We look forward to recognizing and honoring the innovation in new products that will help c-store retailers survive and thrive during these difficult economic times.